All the action stemmed from a U.S. government report showing that inflation slowed in October, better than many economists were expecting.
The US stock market soared this Thursday on its best day in more than two and a half years.
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Investors were encouraged by a report showing inflation in the United States had eased last month by even more than expected.
Consumer price increases went from 8.2 per cent in September to 7.7 per cent in October - a sign that inflation may be showing hopes of slowing down, even if it remains at a near four-decade high.
But analysts cautioned it’s still premature to declare that with certainty.
Slower inflation could keep the Federal Reserve from raising interest rates in order to cool the economy. But the biggest risk is that this could create a recession.
The Fed has raised its benchmark interest rate six times in sizeable increments this year, heightening the risk that the cost of borrowing money for homes, autos and other big-ticket items will tip the world’s largest economy into recession.
Another potentially market-shaking report will hit Wall Street this Friday when the latest reading will show how much inflation U.S. households should expect in future years.
The U.S. has managed to dodge inflation levels that have seeped into other national economies after a global pandemic.
Inflation is squeezing people around the world, with Russia’s invasion disrupting food and fuel supplies to countries in Africa, Asia and the Middle East. Global currencies have also weakened against a strong U.S. dollar, further pushing up costs.
Higher prices are taking a higher toll on Europe, which is feeling the acute effects of an energy crisis triggered by Russia’s war in Ukraine.
Rising prices, especially for food and energy, have unleashed a wave of protests and strikes as the cost of living soars.
Inflation hit a record 10.7 per cent in the 19-country euro area last month, largely driven by energy prices, and though European leaders have approved relief packages to help with energy bills, the discontent threatens political turmoil.